Inflation Compensation Act: A matter of course for tax purposes

That looks like a nice relief: A single person with a taxable annual income of 40,000 euros should have around 350 euros more in the account in 2023, and in 2024 even almost 700 euros.

The situation is similar for the married couple, with 80,000 euros they have 840 and 1506 euros more to live on.

The reason for this is the Inflation Compensation Act.

But appearances are deceptive.

The postponement of the tax rate only ensures that those who have become poorer as a result of currency devaluation are not burdened as in the old better days - i.e. the state does not become a winner of inflation at the expense of its citizens and companies.

What should be taken for granted is not.

Finance Minister Christian Lindner had to fight for this with his FDP.

There was resistance in the coalition.

It came not least from the Greens, who can never collect enough money for the state to use it to shape the country's climate-friendly transformation.

Behind this is an unshakable confidence in the feasibility of a conversion that is controlled centrally from Berlin.

The FDP focuses more on the current concerns and needs of individual citizens and individual companies.

Unfortunately, this can easily be discredited according to the motto: tax policy for higher earners.

Of course, tax policy is social policy.

It is always about distribution issues, in order to avoid the big word distributive justice.

One can argue for a long time about what is just.

The answer to the social question is always a political one.

This, in turn, should not distract from the fact that tax policy is much more than a form of financing the community that is as social as possible: it is always about incentives, without which nothing works in the market economy.

The social state needs citizens and companies that do something so that in the end everyone can live reasonably well.

This connection is being ignored more and more often.

In the meantime, even the once renowned council of experts for the assessment of overall economic development is examining tax issues under the primacy of distributive justice.